5 Life Insurance Policies You Should Consider
Life insurance can be confusing, with so many policies and companies to choose from, but it’s something that everyone should take seriously, especially if you have family members that depend on you financially. The following five life insurance policies are great starting points when considering your options. These will provide you with the financial protection you need and allow you to spend more time with your loved ones in the future.
1) Term Life Insurance
If you are young and healthy, term life insurance might be your best bet. With term life insurance, you'll purchase a set amount of coverage for a set period of time — say, 10 years. This is often referred to as pure term, because it provides coverage only for that set time period; there is no cash value and no potential for loans or returns on investment (ROI). At any point during that 10-year period, if you die your beneficiary will receive an agreed upon amount. If you live past that initial 10-year period, however, your policy will expire.
2) Whole Life
This type of life insurance is often considered traditional or plain vanilla. It’s designed to provide permanent coverage and you only pay premiums while you are alive. There are no cash value benefits, but once you stop paying your premiums, your life insurance will stop as well. The rates on whole life insurance can be significantly higher than other types of policies, especially if they come with a guaranteed interest rate or dividend options, so it’s important to shop around for quotes before buying a policy.
3) Universal Life
Universal life insurance is a hybrid policy that combines characteristics of permanent life insurance and term life insurance. Like its name suggests, universal life allows you to build up cash value over time, as long as you make premium payments. When comparing policies, look for terms like cash value and guaranteed interest rate; these indicate whether or not your investment will grow. Cash value can be withdrawn at any time (though some plans come with fees). The downside of a universal life policy is that it tends to have higher premiums than other types of coverage—but in exchange, it’s flexible.
4) Critical Illness
As you get older, it’s important to have a life insurance policy in place in case something unexpected happens. Of course, knowing what type of life insurance is right for you isn’t always easy. If you want to protect your family from a financial burden but don’t know where to start, a critical illness insurance policy might be exactly what you need. This type of life insurance policy pays out if you become sick and unable to work due to a pre-existing condition—even if that illness wasn’t expected. These policies also typically pay out if you die due to an accident or any other sudden cause (e.g., heart attack), which makes them well worth considering.
5) Small Business Health Plans
Small business health plans aren’t cheap but they’re considerably cheaper than group health insurance for employers. If you have 15 or fewer employees and your employees already have access to other affordable coverage, it’s possible that a small business plan could be a good choice for you. However, keep in mind that small business plans tend to be extremely regulated by states. For example, small businesses often can't use pre-existing conditions as a factor when setting premium prices, which can make it difficult to draw new customers if your rates are higher than similar offerings from competitors who don't have such restrictions.